Correlation Between BANK MANDIRI and Kellogg

Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and Kellogg at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BANK MANDIRI and Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BANK MANDIRI and Kellogg Company, you can compare the effects of market volatilities on BANK MANDIRI and Kellogg and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BANK MANDIRI with a short position of Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and Kellogg.

Diversification Opportunities for BANK MANDIRI and Kellogg

-0.77

Correlation Coefficient

BANK MANDIRI  Kellogg

Pay attention - limited upside

The 3 months correlation between BANK and Kellogg is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Kellogg Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellogg Company and BANK MANDIRI is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BANK MANDIRI are associated (or correlated) with Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellogg Company has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Kellogg go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Kellogg

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Kellogg. In addition to that, BANK MANDIRI is 4.51 times more volatile than Kellogg Company. It trades about -0.04 of its total potential returns per unit of risk. Kellogg Company is currently generating about 0.17 per unit of volatility. If you would invest  7,206  in Kellogg Company on September 3, 2024 and sell it today you would earn a total of  428.00  from holding Kellogg Company or generate 5.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BANK MANDIRI  vs.  Kellogg Company

BANK MANDIRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK MANDIRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BANK MANDIRI is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kellogg Company

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kellogg Company are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Kellogg is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BANK MANDIRI and Kellogg

The main advantage of trading using opposite BANK MANDIRI and Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, Kellogg can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kellogg will offset losses from the drop in Kellogg's long position.

The idea behind BANK MANDIRI and Kellogg Company pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.